Personal Financial Planning Unit 1 Personal Financial Planning

Financial Plan A plan that contains personal financial goals you want to accomplish. A formal process of looking at your current situation and thinking about your future. Will require long-term commitment. As with any plan, you will put it into action and monitor it periodically.

Financial Planner? Some people will want to create their own plan and others may use a financial planner. Financial Planner – Professional trained to provide advice about how to invest earnings, plan for retirement, and manage other financial matters.

Goals Goal – the end result of something a person intends to acquire, achieve, do, reach, or accomplish sometime in the near or distant future Financial goals – specific objectives to be accomplished through financial planning Education goals - enable individuals to prepare for future success in the workplace

Goals Short-term goals – specified as less than one year I plan to raise my English grade from a C+ to a B by the end of this school year by going to the writing lab and having my research paper reviewed prior to turning it in. Long-term goals – specified as more than one year By the end of the next summer year I would like to purchase my first car by saving $50 per month from my part time job.

SMART Goals SMART Goals Specific State exactly what is to be done Measurable Include how the goal can be measured Attainable Determine steps to reach the goal Realistic Do not set goals for something unrealistic Time Bound State when the goal will be met

Education Goals Help individuals prepare for success in the workplace Examples include: Earning an A on an upcoming quiz Attending college Participating in extra-curricular activities Include both short-term and long-term goals Provide guidance and direction Enable individuals to reach financial goals

SMART Goals SMART Goals Specific Measurable Attainable Realistic State exactly what is to be done with the education aspect involved Measurable Write the grade or class that the goal is for Attainable Determine how it can be reached Realistic Do not set goal for something unrealistic Time Bound Specifically state when the goal needs to be reached

SMART Education Goal Goal – “I want to attend college.” SMART goal – Specific – I want to attend a four year college Measurable – Because I want to attend a four year college, I will earn a B in algebra Attainable – Because I want to attend a four year college, I will earn a B in algebra this semester Realistic – Because I want to attend a four year college, I will earn a B in algebra this semester to prepare me for the college entrance exam Time Bound – Because I want to attend a four year college, I will earn a B in algebra this semester to prepare me for the college entrance exam when I am a junior in high school

SMART Financial Goals Specific Measurable Attainable Realistic State exactly what is to be done with the money involved Measurable Write the exact dollar amount the goal is for Attainable Determine how it can be reached, which is often determined by the individual’s budget Realistic Do not set goal for something unattainable or unrealistic Time Bound Specifically state when the goal needs to be reached

SMART Financial Goal Goal – I want to buy a new car SMART goal – Specific – I plan to save for a down payment on a new car Measurable – I plan to save $5,000 for a down payment on a new car Attainable – I plan to save $5,000 for a down payment on a new car by saving $200 from every paycheck Realistic – It is realistic to save $200 from each paycheck for a down payment on a car because I usually waste the money on unnecessary items instead of saving it Time Bound – I plan to save $5,000 for a down payment on a new car by saving $200 from each paycheck for two years.

What is Missing? Find the missing element (specific, measurable, attainable, realistic, or time bound) in the following financial goals Financial Goal #1 As a senior in high school, I plan to save $5,000 for college living expenses in four years.

What is Missing? Financial Goal #1 Answer: Attainable

What is Missing? Find the missing element (specific, measurable, attainable, realistic, or time bound) in the following financial goals Financial Goal #2 I plan to save for a new computer by saving $150 each month for one year.

What is Missing? Financial Goal #2 Answer: Measurable

What is Missing? Find the missing element (specific, measurable, attainable, realistic, or time bound) in the following financial goals Financial Goal #3 I plan to save $2,500 by saving $105 each month for 2 years.

What is Missing? Financial Goal # 3 Answer: Specific

What is Missing? Find the missing element (specific, measurable, attainable, realistic, or time bound) in the following financial goals Financial Goal #4 I plan to save $1,500 to buy a used car by saving $75 from each paycheck

What is Missing? Financial Goal # 4 Answer: Time Bound

What is Missing? Find the missing element (specific, measurable, attainable, realistic, or time bound) in the following financial goals Financial Goal #5 I plan to save $2,000 to pay for a new computer by saving my whole paycheck for the next 6 months

What is Missing? Financial Goal # 5 Answer: Realistic

Wrap Up Your financial plan represents your personal financial goals at one point in time. Those goals are likely to change over time. For example, you may inherit money, or you may have a job opportunity overseas, or you may wish to spend more time on a hobby or a side business. The financial plan is a work in progress; it is never finished. As one goal is accomplished, another personal goal is defined.

Your Personal Financial Plan Beginning tomorrow you will write your own plan. This project will give you the opportunity to think about your goals. You will have 2 ½ days to complete this in the lab. Next Monday and Tuesday we will present the plans to the class. Thursday we will have our first quiz (25 questions).